If I file Chapter 13 will it avoid my car being repossessed?

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If I file Chapter 13 will it avoid my car being repossessed?

Asked on December 2, 2011 under Bankruptcy Law, Massachusetts

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

No, unfortunately, it probably will not. While filing bankruptcy, including Chapter 13, can prevent the creditor from suing you for the balance you owe, it does not negate or void any security interests in property. So if a lender has a security interst in your car (and auto financing typically includes such an interest--that's where  the ability to repossess comes from), they can still take the car if you don't make your payments; it's just that all they can do is take the car--they can't also sue for any extra money. Also, filing bankruptcy will at least temporarily stay, or halt, collections activity (including repossession), so it may give you more time to get your finances in order so you can pay for the car.


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